Construction outlook: poll of industry professionals

New year, newfound optimism in the sector?

Due to the lag in data publication, we don’t yet have the full results for how construction fared at the end of 2025.

The latest Office for National Statistics (ONS) data show that monthly construction output declined in November, falling by 1.3% on October activity, and reaching its lowest level since April 2024. New work output was down by 1.9% on the month, while repair and maintenance output decreased by 0.4%. BCIS is forecasting subdued growth for 2025 as a whole, but for activity levels to increase in 2026.

In a poll of more than 400 construction professionals, the majority cost consultants and surveyors (carried out during our latest construction outlook webinar), more than half (54%) said they expected a ‘slight increase’ in UK construction output in 2026. Around one-third (32%) said they expect output to remain flat. Just 4% anticipated a ‘significant increase’, while only two respondents thought there will be a ‘significant decrease’.

Dr David Crosthwaite, chief economist at BCIS, said: ‘Expectations for 2026 point to a modest improvement in activity rather than a sharp rebound. After a prolonged period of economic uncertainty, easing inflation and softer cost pressures are starting to provide some support, but the wider backdrop remains challenging. That combination helps explain why most of our respondents’ expectations cluster around slight growth or flat output, rather than a strong upswing.’

Workload expectations broadly stable

A similar picture emerged when webinar attendees were asked about their own workload expectations over the coming year, with responses more positive than when the same question was asked in the third quarter of 2025.

40% of respondents said they expected it to rise over the next 12 months, while 42% predicted it will stay the same. 10% anticipated a decrease in workload, with 8% unsure.

Dr Crosthwaite added: ‘Workload expectations reflect similar conditions. Demand has not fallen away across the board, but neither has it returned to more buoyant levels seen before the pandemic. With funding conditions still tight in parts of the market and project pipelines uneven, it is understandable that many businesses are planning for stability or gradual improvement rather than rapid expansion.’

Input cost expectations

Materials cost inflation has been moderating since peaking in 2022 and annual growth in the BCIS Materials Cost Index was in negative territory between 3Q2023 and 2Q2024. Forecast figures for 4Q2025 show annual growth of 2.8% in the index.

When we asked respondents about their expectations for materials costs over the next 12 months, 74% predicted an increase, 19% expected them to stay the same, and only 1% believed they would fall. 6% were uncertain about what lies ahead for material costs.

Labour costs continue to be the major driver of project expenses. Although annual growth in the BCIS Labour Cost Index had eased at the beginning of 2025, increases to employers’ National Insurance contributions and the National Living Wage in April fed into a 7.1% annual increase in the index in 2Q2025. Forecast figures for the end of 2025 suggest labour cost growth remains elevated.

Reflecting this, 78% of respondents expected labour costs to rise in the next 12 months, while 15% believed costs will stay the same. Only 2% predicted a decrease, while 5% were unsure.

Labour availability remains a concern

Concerns around labour availability also persist. While government initiatives to boost training and expand technical colleges are welcomed, many professionals view these as longer-term measures, with limited near-term impact.

When asked about labour availability over the next year, nearly half (47%) of respondents expected conditions to remain unchanged, while one-third (33%) anticipated availability will worsen. Just 10% expected an improvement, with a further 10% unsure.

Dr Crosthwaite said: ‘Labour availability remains a structural concern for the industry. While recent policy initiatives to support training and skills development are welcome, they will take time to feed through. The industry itself also has a role to play in growing the workforce, including through greater direct employment and longer-term investment in skills.

‘If demand does recover, existing shortages are likely to become visible quite quickly if the sector is unable to mobilise capacity at pace. That risk reinforces the importance of workforce planning alongside any improvement in market conditions.’

You can access the construction outlook poll results here.

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